Curbing historic tax credits

A bill that would render the state's historic
preservation tax credit useless for at least a decade passed the Senate on
Wednesday.

But House
Bill 1111 — approved 48-2 — also creates a new local
preservation tax credit that could help cities and counties boost historic
preservation in their communities.

The bill's sponsor, Sen.
Luke Kenley, R-Noblesville, said the credit is
more appropriate for local governments because they are the ones struggling to
maintain their downtowns.

"In a large part, this is a local problem that should
have local solutions," Kenley said. "So we
have created the ability for local cities and local communities to adopt a
historic tax credit on their own that would mirror the state credit. They could
structure it as a credit against local option income taxes or property taxes."

The bill now moves back to the House and then is expected to
go to a conference committee, where members of the House and Senate will try to
work out a compromise on the legislation.

That's because the House version of the bill actually
expanded the state credit, pumping more money into the program and earmarking
at least some of it for those smaller, Main Street projects.

Sen.
John Broden, D-South Bend, said Wednesday he
supports the House version of the bill because it would boost development.

"Guess what: We've found a tax credit that works,"
Broden said. "This is a tax credit that there is
great demand for. Private investors, private money is gobbling up these tax
credits because this works."

The tax credit is geared to preservation projects that will
result in income-producing properties. Developers are awarded income tax
credits worth up to 20 percent of their rehabilitation costs. But Indiana
limits the credits to a total of $450,000 annually.

The cap is so low that it doesn't come close to fulfilling
the demand for credits. So the state has actually allocated them for future
years, essentially tying up the program through 2023. That means developers
could be awarded tax credits for projects under construction this year but not
be able to actually use them to lower their tax bills for more than a decade.

As passed by the Senate, HB 1111 would prohibit the state
from assigning the credits to future years. Without additional funding, it
makes the credit unusable.

The House bill increases the state funding for the program
to $2 million annually, with $450,000 a year dedicated to the backlog.

Kenley said the General
Assembly shouldn't make any decisions about state funding until next year,
when lawmakers will write the next two-year state budgets.

Lesley Weidenbener is managing editor of TheStatehouseFile.com, a
news website powered by Franklin College journalism students.